| Previous Section | Index | Home Page |
Mr. Nick St. Aubyn (Guildford): Can the hon. Gentleman say which countries are doing that so much better than we are?
Mr. Illsley: I cannot. Our industry, and, I think, the Government, would maintain that we have a very efficient haulage industry. No matter how good the industry, packing a 32-tonne lorry with food, carpets or whatever, still means that a lot of space and fresh air is carried. Some issues cannot be addressed without research and development in the areas of packaging and freight haulage. We need up-to-date research to find out whether the arguments of the haulage industry are correct and whether it is true that it is disadvantaged vis-a-vis our European partners.
Mr. William Ross (East Londonderry): It is a pleasure to follow the hon. Member for Barnsley, Central (Mr. Illsley), if only because I intend to address many of the issues that he raised from the point of view of Northern Ireland. As he will discover, if things are bad with him, they are a great deal worse with us.
It would be interesting first to consider the debate so far and cast our minds back to the things that used to exercise us when there was much talk about the public sector borrowing requirement and how it could be reduced. The Government, and the previous Government, are to be congratulated in that we have sometimes got to the stage of repaying public sector debt, which I strongly favour. I hope that the Chancellor will keep it firmly in the forefront of his mind, because the saving in interest alone that would result from getting rid of the huge burden of Government debt is a fair prospect that he should try to realise. We pay out far too much money servicing public sector debt, which is often much the priciest way of securing investment. In addition, much borrowing is spent not on investment but on current expenditure, which means that we get no return for the public sector debt. I favour reducing it to nil if it can be managed.
The estimation of the tax demand that the tax-paying public will bear, however grudgingly, has exercised the brains of every ruler and Chancellor since taxation began. Get it wrong, and there will be resistance. At its most benign, that means tax fraud and avoidance. The next level up is smuggling. Formerly, the next level was rebellion and violence; now, it means moving overseas or across borders, as happens in Northern Ireland, to a lower tax regime.
I note from the CARE--Christian Action, Research and Education--brief sent to Members that in his 1997 Budget speech the Chancellor said:
The statement illustrates an objective of taxation that is often ignored: the desire of the Government to achieve aims other than the mere raising of revenue. In a world where travel was slow and difficult and economies were isolated, it was relatively easy to ring-fence an economy. There was always some leakage, but in today's world, and especially in a borderless Europe, the leaks have turned into a raging torrent driven by widely different tax rates. Some of our rates have been set for laudable reasons besides raising revenue; but, in pursuit of those objectives, the balance has gone far beyond the willingness of the targeted population. The unwillingness to pay is rooted in the resentment felt by citizens when they compare like with like in other economies and countries.
Some years ago, the previous Government was well warned of the consequences of increasing tax on tobacco. I mentioned it several times. As long ago as 1994, in relation to tobacco, I said:
The smuggling of tobacco in its various forms is swelling from a trickle to a flood because of the vast difference in tax rates between United Kingdom and continental Europe. Those interested in what we were told by Gallaher's workers and management have only to look up my previous speeches. I will not weary the House with all that now, but it is clear that they were correct. Seventy per cent. of hand-rolling tobacco sold in this country is stuff that was exported mainly from Gallaher's. It is back here in a fortnight--smuggled in. The loss to the Revenue is immense. Gallaher's forecast that, if taxation on cigarettes went up, the same thing would happen, and it duly did. That is why I believe that we went far beyond what was fair and reasonable or what people were prepared to pay.
The benefits to the health of the nation from increased taxation on tobacco have not been realised. The tobacco industry is being wrecked and revenue is being lost. As I said in the Budget debate, the Red Book forecasts that the tobacco industry will decline in the next few years because the tax on tobacco has gone beyond what any citizen will willingly pay. Criminal activities have taken over, the revenue stream has been wrecked, and there is no benefit to the country. People are still smoking.
We have used the stick to stop people smoking, but it is not working because people are now avoiding it. It is time to get back to the carrot, and the carrot has to be rooted in education, starting with the very young.
If the desired end of the tobacco tax regime was health rather than revenue, the desired end of the road fuel and vehicle excise duty regimes was environmental rather than revenue-inspired. We all know, of course, that both revenue and environmental considerations brought the road fuel escalator into being. At least that is what we have been told by both the present and previous Administrations.
The explosion of anger and frustration witnessed in Great Britain on the streets of this city and others since the Budget is clear proof that road taxes have passed beyond what most people affected by them believe to be reasonable, fair or equitable compared with those in other countries. I raised that matter in a debate as long ago as 15 December 1994. I pointed out the effect of the cost of fuel on every item that we purchased and the need for urban and suburban, comprehensive, high-frequency, cheap public transport to replace private cars in cities if there was to be any real environmental benefit.
I also drew attention to the consequences of high road fuel taxes for the rural dweller, for whom a car is not an option but an essential. The previous Government, and now the present Chancellor, have continued on the same line of action and have increased road fuel taxes, with the inevitable and foreseeable consequences. So there is no excuse for being where we are today. It should not have happened. People should have known enough to put the brakes on tax increases long since.
I understand that there is to be a debate on fuel taxation and the road haulage industry in the House tomorrow. I personally regret that it is to be held before the report on the effects of the policy in Northern Ireland has been made available. The Northern Ireland Select Committee has done such a report. I fear that it will not be published before tomorrow, but I understand that damning evidence was given as to the effects of the policy in Northern Ireland. I shall content myself by saying that it now seems that the figure that I gave to the House in March of £100 million of lost revenue in Northern Ireland alone in the past year appears to be wide of the mark. That figure is only a fraction of the true cost, which was anything up to £400 million last year. That is the cost of fuel smuggling between the Irish Republic and Northern Ireland.
Any hon. Member besides me who had the opportunity of watching the television news in Belfast just after the Budget would have seen one lorry driver interviewed. I think that he was the owner of one truck, who did most or probably all of his work in Ireland. He told the television crew and the people of Northern Ireland that he did not buy any fuel in Northern Ireland. He bought it all in the Republic, saving £2,200 a month--£550 a week. I suppose that most people would be happy with that as profit, never mind extra profit. But perhaps the driver was not making any profit. He was not the only person buying all his fuel in the Irish Republic.
Many operators are now transferring their fleets to the Republic to take advantage not only of the cheap fuel there, but of the lower vehicle excise duty. I hope that
whoever is in the Chair tomorrow will call some of my hon. Friends who are members of the Select Committee. They will be able to give other illustrations of the activities of the smugglers, many of whom in the border areas appear to be tied to the most violent and ruthless of the terrorist organisations. They will be able to describe the role of those organisations in fuel smuggling, the amount of money that they make, the amount of fuel shifted and the damage that is being done to all legitimate businesses in the border towns of Northern Ireland. The damage is colossal, and there is no point in saying, "We are doing our best." The best that has been done so far is not nearly good enough. A system of smuggling of outrageous criminality exists and it has to be defeated.
One story that the Select Committee was told was of a character who had got himself a stock lorry. He built a large tank inside it, stuffed all the ventilation holes with sheep's fleeces, put a dozen old ewes into the back bit, filled up the tank with fuel and drove backwards and forwards across the border all day until the Revenue caught him. Whenever officers glanced into the ventilation holes, they saw a few sheep blatting in the back end of the lorry. They did not realise that there were thousands of gallons of smuggled fuel in the front half of the vehicle.
Smugglers are an ingenious and ruthless lot. They have cost the Treasury an enormous sum of money. The damage that they are doing to the haulage industry in Northern Ireland is beyond comprehension. That has to be dealt with in Northern Ireland and the rest of Great Britain, especially in the light of what the hon. Member for Barnsley, Central (Mr. Illsley) said.
Hon. Members will recall that in Question Time last week the Minister of Transport gave the impression that accurate figures were available in respect of the costs for the road haulage industry in each EU country. I tabled written questions asking for those costs, which were due to be answered on Friday. The reply to the five or six questions that I tabled was that the Minister would answer me shortly. I hope that he will. I had hoped that the answers would be available today: they are not. That will surprise the House, because the Minister suggested that the information was sitting there and we had only to ask for it. Perhaps the details that I have asked for are so comprehensive that it has taken some time to assemble them. Let us hope that they are available tomorrow. I hope that they will give us a clear picture.
If the figures show that the costs in the United Kingdom as compared with those in EU countries are as the Government allege, hauliers will recognise that it is in their financial interest to stay within the United Kingdom. Given some of their reactions to the new tax rates in the past few weeks, I think that hauliers will take some convincing. We shall wait and see. It is sufficient for today's proceedings to say that the situation is intolerable and it has to be resolved.
I am glad to see that the provisions of the Bill in relation to road fuel will be considered on the Floor of the House. I look forward to those debates, but I regret that we are not taking on the Floor of the House the provisions relating to vehicle excise duty.
"The tax system sends critical signals about . . . activities that a society wishes to promote and deter."--[Official Report, 2 July 1997; Vol. 297, c. 311.]
I hope that he has not forgotten that, but keeps it firmly stuck to the front of his desk when he considers future Budget proposals. It might be better to replace "society" with "Government", but the principle is correct.
"we simply cannot go on allowing important sectors of the economy to be undermined or destroyed because we are so out of step with other countries"--[Official Report, 13 December 1994; Vol. 251, c. 854.]
That was echoed by the hon. Member for Barnsley, Central. We have now arrived at that point. The tobacco situation has developed exactly as the management and trade union representatives at the Gallaher's factory in Ballymena forecast. Every year they visit the House to meet Members not only from Northern Ireland but from elsewhere in the Kingdom. They will confirm, if confirmation is needed by Treasury Ministers, that those forecasts were made. They have now been borne out.
| Next Section
| Index | Home Page |